McDonald's HQ move is boldest step yet in effort to transform itself

McDonald's has taken the boldest step yet in its yearlong effort to transform itself into a "modern, progressive" company by moving downtown with the cool kids.

The world's largest burger chain plans to relocate from the custom-built Oak Brook headquarters it has called home for nearly four decades to Chicago's West Town neighborhood, an area of hot restaurants and bars, becoming the latest corporation moving to be closer to the millennials they want as employees.

McDonald's didn't receive any incentives for the move from its longtime home in Oak Brook, a nod to how vital the move was as a symbol of McDonald's transformation under CEO Steve Easterbrook.

McDonald's will move by spring 2018 to the former site of Oprah Winfrey's Harpo Studios at 1045 W. Randolph St., which was home to "The Oprah Winfrey Show" for 25 years. The move will bring McDonald's corporate employees, which currently number about 2,000, from the suburban village to the hustle and bustle of a burgeoning part of the city that is home to some of Chicago's most popular restaurants, like Girl and the Goat and Au Cheval.

In its bid to attract talent, McDonald's will join a roster of heavy hitters that already have or plan to move from the suburbs to the city — marquee names like Motorola Solutions, Kraft Heinz, Gogo, Hillshire Brands, Beam Suntory and ConAgra. Rumors that McDonald's was considering a move have been swirling for months.

"To me, this just shows the commitment level Steve (Easterbrook) has toward revitalizing and making a more streamlined business," Morningstar analyst R.J. Hottovy said. "This is obviously part of the company's cost-cutting efforts: to create a more condensed and modern headquarters, but they will also attract a different, more tech-savvy kind of employee."

Oak Brook officials received official word Monday from a McDonald's executive shortly before the company's public announcement that it was moving its headquarters and Hamburger University from Oak Brook to Chicago's West Town neighborhood.

Joe Endress, McDonald's vice president of facilities and...

Oak Brook officials received official word Monday from a McDonald's executive shortly before the company's public announcement that it was moving its headquarters and Hamburger University from Oak Brook to Chicago's West Town neighborhood.

Joe Endress, McDonald's vice president of facilities and...

(Chuck Fieldman)

The planned relocation is the biggest change thus far for Easterbrook, who already has seen success from big initiatives to improve the business, most notably the launch of all-day breakfast. The executive, who was installed in the top job in March 2015, promised that "nothing is off the table" when it comes to change at the company, acknowledging the chain in the past has been slow to adapt to its customers' needs. Under Easterbrook's leadership, McDonald's has seen consistent sales growth and a stock price at repeated all-time highs.

"We are a brand on the move in more ways than one," Easterbrook said in a news release Monday. "Moving our headquarters to Chicago is another significant step in our journey to build a better McDonald's. This world-class environment will continue to drive business momentum by getting us even closer to customers, encouraging innovation and ensuring great talent is excited about where they work."

More young workers want to live in the city today than they did in the 1970s, when McDonald's first left Chicago for the suburbs. In addition to office space for corporate employees on its wooded Oak Brook campus, McDonald's has test kitchens as well as a Hyatt-operated hotel called "McLodge" and Hamburger University, a training center for executives and managers. McDonald's was headquartered in Chicago from 1955 to 1971.

"There is some millennial talent in the suburbs but it's harder to find and it's easier to create a culture in the city," said Tom Gimbel, founder and CEO of Chicago-based staffing and recruiting firm LaSalle Network. "There is an energy level that comes from new hires. It touches everything."

Antonio Perez / Chicago Tribune

The exterior of the former Harpo Studios in Chicago is seen June 2, 2016. McDonald's announced plans to leave its longtime headquarters in Oak Brook for a new home on Chicago's Near West Side.

The exterior of the former Harpo Studios in Chicago is seen June 2, 2016. McDonald's announced plans to leave its longtime headquarters in Oak Brook for a new home on Chicago's Near West Side.

(Antonio Perez / Chicago Tribune)

Easterbrook also has said the Oak Brook campus, which was custom-built for the company in 1978 by renowned architect Dirk Lohan, is showing its age.

Gimbel agreed. "That campus is as old as dirt. It was really great and cutting-edge in the '80s, but it's old, it's dated, it needed to be redone," he said. By moving, "McDonald's is saying, 'We're still leading, we're still innovative.' They don't want to end up being Sears."

The loss will be a sizable one for Oak Brook. McDonald's is the only Fortune 500 company based in the suburb. It's unclear how many employees will occupy the new West Town headquarters building, but the company is leaving no operations behind in Oak Brook.

McDonald's operates an 86-acre campus but owns 150 acres of land across five sites in the village, including its original Oak Brook location at 2111 McDonald's Drive, which now houses the offices of its U.S. business.

McDonald's is close to finalizing a deal to relocate its longtime headquarters to Chicago's Near West Side, a move that could take place as soon as 2018, according to a source with knowledge of the deal.

The world's largest burger chain plans to keep part of Oprah Winfrey's old four-building Harpo...

McDonald's is close to finalizing a deal to relocate its longtime headquarters to Chicago's Near West Side, a move that could take place as soon as 2018, according to a source with knowledge of the deal.

The world's largest burger chain plans to keep part of Oprah Winfrey's old four-building Harpo...

(Samantha Bomkamp and John Byrne)

Financial terms of McDonald's West Town lease weren't disclosed. Developer Sterling Bay bought the studio complex for $30.5 million in 2014. Harpo ended production of there last year.

No details of the redevelopment have been disclosed. McDonald's also has not determined if it will consolidate its River North digital office, opened just a year ago, into the new West Town complex, spokeswoman Becca Hary said.

With the Chicago deal finalized, Hary said the company will begin to market the Oak Brook facilities to potential buyers.

"I think it takes a really brave soul to say, 'We're walking away from that history,' but in this day and age, you've got to be willing to reinvent yourself," Gimbel said.

In recent years, several big-name companies have moved or announced plans to move their headquarters to the Chicago metropolitan area — or from the suburbs to downtown.

A version of this article appeared in print on June 14, 2016, in the News section of the Chicago Tribune with the headline "McDonald's to continue reinvention in city HQ - West Town home seen as way to draw millennial workers" —
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